Tranter, Inc., is considering a project that would have a ten-year life and would require a $1,200,000 investment in equipment. At the end of ten years, the project would terminate and the equipment would have no salvage value. The project would provide net operating income each year as follows:
- Sales $ 1,700,000
- Variable expenses 1,200,000
- Contribution margin 500,000
- Fixed expenses
- Fixed out-of-pocket cash expenses $200,000
- Depreciation 120,000 320,000
- Net operating income $ 180,000
All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 12%.Compute the project's internal rate of return to the nearest whole percent. Ignore income taxes in your computation.